United States v. Butler

[Mr. Justice Roberts delivered the opinion of the Court, 297 U. S. 53–78. Mr. Justice Stone filed a dissenting opinion, 297 U. S. 78–88; Mr. Justice Brandeis and Mr. Justice Cardozo joined it, at p. 88. The 1936 Reporter’s syllabus prints no vote tally and no roster of the majority; the line-up given here is taken from the opinions themselves. Congress enacted the Agricultural Adjustment Act of 1933 to raise depressed farm prices by cutting production: the Secretary of Agriculture paid farmers rental and benefit payments in return for their agreement to reduce acreage, and the money came from a processing tax on the first domestic processing of the affected commodity — here, cotton. The United States presented a claim for processing and floor taxes to the receivers of the Hoosac Mills Corporation; the receivers recommended disallowance; the District Court ordered the taxes paid; the Circuit Court of Appeals reversed; and the United States brought the case here on certiorari. The statutory details, the standing question, the authorities on taxation as a pretext, and the illustrations near the end of the majority opinion are shortened; every cut is marked, and footnotes are omitted. Bracketed italics are editorial; everything else is verbatim.]

MR. JUSTICE ROBERTS delivered the opinion of the Court.

In this case we must determine whether certain provisions of the Agricultural Adjustment Act, 1933, conflict with the Federal Constitution.

[Section 1 of Title I recites an economic emergency arising from the disparity between the prices of agricultural and other commodities. Section 2 declares the policy of restoring to agricultural commodities “a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period” — for cotton, August, 1909, to July, 1914. Section 8 empowers the Secretary, “[i]n order to effectuate the declared policy,” to provide for reduction in acreage or production “through agreements with producers or by other voluntary methods, and to provide for rental or benefit payments in connection therewith … in such amounts as the Secretary deems fair and reasonable.”]

It will be observed that the Secretary is not required, but is permitted, if, in his uncontrolled judgment, the policy of the act will so be promoted, to make agreements with individual farmers for a reduction of acreage or production.

Section 9 (a) enacts:

“To obtain revenue for extraordinary expenses incurred by reason of the national economic emergency, there shall be levied processing taxes as hereinafter provided. When the Secretary of Agriculture determines that rental or benefit payments are to be made with respect to any basic agricultural commodity, he shall proclaim such determination, and a processing tax shall be in effect with respect to such commodity … . The processing tax shall be levied … upon the first domestic processing of the commodity … and shall be paid by the processor… .”

[Section 9 (b) fixes the tax “at such rate as equals the difference between the current average farm price for the commodity and the fair exchange value.” Sections 12 (a) and 12 (b) appropriate $100,000,000 and the proceeds of all taxes to rental and benefit payments; § 16 lays a floor tax on stocks of processed articles.]

On July 14, 1933, the Secretary of Agriculture, with the approval of the President, proclaimed that he had determined rental and benefit payments should be made with respect to cotton; that the marketing year for that commodity was to begin August 1, 1933; and calculated and fixed the rates of processing and floor taxes on cotton in accordance with the terms of the act.

The United States presented a claim to the respondents as receivers of the Hoosac Mills Corporation for processing and floor taxes on cotton levied under §§ 9 and 16 of the act. The receivers recommended that the claim be disallowed. The District Court found the taxes valid and ordered them paid. Upon appeal the Circuit Court of Appeals reversed the order. The judgment under review was entered prior to the adoption of the amending act of August 24, 1935, and we are therefore concerned only with the original act.

[First. The Court rejects the Government’s standing objection. Massachusetts v. Mellon, 262 U. S. 447, would control “if we were here concerned merely with a suit by a taxpayer to restrain the expenditure of the public moneys”; but “here the respondents who are called upon to pay moneys as taxes, resist the exaction as a step in an unauthorized plan.” Nor will the Court treat the Act as two statutes. The tax “plays an indispensable part in the plan of regulation” — “the heart of the law,” in the Administrator’s phrase.]

The statute not only avows an aim foreign to the procurement of revenue for the support of government, but by its operation shows the exaction laid upon processors to be the necessary means for the intended control of agricultural production.

It is inaccurate and misleading to speak of the exaction from processors prescribed by the challenged act as a tax, or to say that as a tax it is subject to no infirmity. A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government. The word has never been thought to connote the expropriation of money from one group for the benefit of another… . The exaction cannot be wrested out of its setting, denominated an excise for raising revenue and legalized by ignoring its purpose as a mere instrumentality for bringing about a desired end. Child Labor Tax Case, 259 U. S. 20, 37.

We conclude that the act is one regulating agricultural production; that the tax is a mere incident of such regulation and that the respondents have standing to challenge the legality of the exaction.

[That conclusion does not by itself void the exaction: an incident of a regulation Congress may impose is not bad merely because it is loosely called a tax. The question is whether Congress may impose the regulation.]

Second. The Government asserts that even if the respondents may question the propriety of the appropriation embodied in the statute their attack must fail because Article I, § 8 of the Constitution authorizes the contemplated expenditure of the funds raised by the tax. This contention presents the great and the controlling question in the case.

There should be no misunderstanding as to the function of this court in such a case. It is sometimes said that the court assumes a power to overrule or control the action of the people’s representatives. This is a misconception. The Constitution is the supreme law of the land ordained and established by the people. All legislation must conform to the principles it lays down. When an act of Congress is appropriately challenged in the courts as not conforming to the constitutional mandate the judicial branch of the Government has only one duty,—to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former. All the court does, or can do, is to announce its considered judgment upon the question. The only power it has, if such it may be called, is the power of judgment. This court neither approves nor condemns any legislative policy. Its delicate and difficult office is to ascertain and declare whether the legislation is in accordance with, or in contravention of, the provisions of the Constitution; and, having done that, its duty ends.

The question is not what power the Federal Government ought to have but what powers in fact have been given by the people. It hardly seems necessary to reiterate that ours is a dual form of government; that in every state there are two governments,—the state and the United States. Each State has all governmental powers save such as the people, by their Constitution, have conferred upon the United States, denied to the States, or reserved to themselves. The federal union is a government of delegated powers.

[Of the powers in Article I, § 8, only two clauses bear on the statute. The commerce clause is put aside as irrelevant: the Act “does not purport to regulate transactions in interstate or foreign commerce,” its stated purpose being “the control of agricultural production, a purely local activity,” and the Government does not defend it on that ground.]

The clause thought to authorize the legislation,—the first,—confers upon the Congress power “to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States… .”

[Both sides agree, and the Court accepts, that “to provide for the general welfare” is not a freestanding grant but a qualification of the power to lay and collect taxes; Story warns that the contrary reading would make the United States “a government of general and unlimited powers, notwithstanding the subsequent enumeration of specific powers.” The Government’s argument is that Congress may spend for the general welfare, that the phrase covers anything conducive to national welfare, and that its application rests with Congress alone. That argument brings the Court to the question it has never before had to answer.]

The Congress is expressly empowered to lay taxes to provide for the general welfare… . [The public funds] can never accomplish the objects for which they were collected unless the power to appropriate is as broad as the power to tax. The necessary implication from the terms of the grant is that the public funds may be appropriated “to provide for the general welfare of the United States.” These words cannot be meaningless, else they would not have been used… . How shall they be construed to effectuate the intent of the instrument?

Since the foundation of the Nation sharp differences of opinion have persisted as to the true interpretation of the phrase. Madison asserted it amounted to no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress. In this view the phrase is mere tautology, for taxation and appropriation are or may be necessary incidents of the exercise of any of the enumerated legislative powers. Hamilton, on the other hand, maintained the clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. Each contention has had the support of those whose views are entitled to weight. This court has noticed the question, but has never found it necessary to decide which is the true construction. Mr. Justice Story, in his Commentaries, espouses the Hamiltonian position. We shall not review the writings of public men and commentators or discuss the legislative practice. Study of all these leads us to conclude that the reading advocated by Mr. Justice Story is the correct one. While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of § 8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.

But the adoption of the broader construction leaves the power to spend subject to limitations.

[Story is quoted twice, the second time to the effect that a power to lay taxes for the general welfare “is not in common sense a general power. It is limited to those objects. It cannot constitutionally transcend them.”]

That the qualifying phrase must be given effect all advocates of broad construction admit. Hamilton, in his well known Report on Manufactures, states that the purpose must be “general, and not local.” Monroe, an advocate of Hamilton’s doctrine, wrote: “Have Congress a right to raise and appropriate the money to any and to every purpose according to their will and pleasure? They certainly have not.” Story … makes it clear that the powers of taxation and appropriation extend only to matters of national, as distinguished from local welfare.

Every presumption is to be indulged in favor of faithful compliance by Congress with the mandates of the fundamental law… . But, despite the breadth of the legislative discretion, our duty to hear and to render judgment remains. If the statute plainly violates the stated principle of the Constitution we must so declare.

[Having given the Government the broader construction of the General Welfare Clause, the Court now takes the case away from it on another ground.]

We are not now required to ascertain the scope of the phrase “general welfare of the United States” or to determine whether an appropriation in aid of agriculture falls within it. Wholly apart from that question, another principle embedded in our Constitution prohibits the enforcement of the Agricultural Adjustment Act. The act invades the reserved rights of the states. It is a statutory plan to regulate and control agricultural production, a matter beyond the powers delegated to the federal government. The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan. They are but means to an unconstitutional end.

From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted … are reserved to the states or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited. None to regulate agricultural production is given, and therefore legislation by Congress for that purpose is forbidden.

It is an established principle that the attainment of a prohibited end may not be accomplished under the pretext of the exertion of powers which are granted.

[The Court quotes McCulloch v. Maryland, 4 Wheat. 316, 423, on the “painful duty of this tribunal” where Congress passes laws “under the pretext of executing its powers,” and Linder v. United States, 268 U. S. 5, 17.]

These principles are as applicable to the power to lay taxes as to any other federal power. Said the court, in McCulloch v. Maryland, supra, 421:

“Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.”

The power of taxation, which is expressly granted, may, of course, be adopted as a means to carry into operation another power also expressly granted. But resort to the taxing power to effectuate an end which is not legitimate, not within the scope of the Constitution, is obviously inadmissible.

[Roberts collects the authority: “Congress is not empowered to tax for those purposes which are within the exclusive province of the States,” Gibbons v. Ogden, 9 Wheat. 1, 199; the “virtual limitations” recognized in Veazie Bank v. Fenno, 8 Wall. 533, 541; and Child Labor Tax Case, Hill v. Wallace, Linder, and United States v. Constantine, holding measures cast as taxes to be an abuse of the taxing power where the levy was in truth “a means to force compliance.”]

These decisions demonstrate that Congress could not, under the pretext of raising revenue, lay a tax on processors who refuse to pay a certain price for cotton, and exempt those who agree so to do, with the purpose of benefiting producers.

Third. If the taxing power may not be used as the instrument to enforce a regulation of matters of state concern with respect to which the Congress has no authority to interfere, may it, as in the present case, be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command? The Government asserts that whatever might be said against the validity of the plan if compulsory, it is constitutionally sound because the end is accomplished by voluntary co-operation. There are two sufficient answers to the contention. The regulation is not in fact voluntary. The farmer, of course, may refuse to comply, but the price of such refusal is the loss of benefits. The amount offered is intended to be sufficient to exert pressure on him to agree to the proposed regulation. The power to confer or withhold unlimited benefits is the power to coerce or destroy. If the cotton grower elects not to accept the benefits, he will receive less for his crops; those who receive payments will be able to undersell him. The result may well be financial ruin. The coercive purpose and intent of the statute is not obscured by the fact that it has not been perfectly successful. [That Congress went further in the Bankhead Cotton Act, using the taxing power “in a more directly minatory fashion to compel submission,” only exposes the coercive purpose of the present act.] It is clear that the Department of Agriculture has properly described the plan as one to keep a non-cooperating minority in line. This is coercion by economic pressure. The asserted power of choice is illusory.

[The Court draws the analogy to Frost Trucking Co. v. Railroad Comm’n, 271 U. S. 583, where “the argument was, as here, that the carrier had a free choice,” and the condition was struck down, at p. 593:]

“If so, constitutional guaranties … are open to destruction by the indirect but no less effective process of requiring a surrender, which, though, in form voluntary, in fact lacks none of the elements of compulsion… . In reality, the carrier is given no choice, except a choice between the rock and the whirlpool,—an option to forego a privilege which may be vital to his livelihood or submit to a requirement which may constitute an intolerable burden.”

But if the plan were one for purely voluntary co-operation it would stand no better so far as federal power is concerned. At best it is a scheme for purchasing with federal funds submission to federal regulation of a subject reserved to the states.

[The Government points to the many appropriations made for expenditure under contracts between the government and individuals.] But appropriations and expenditures under contracts for proper governmental purposes cannot justify contracts which are not within federal power… . The Congress cannot invade state jurisdiction to compel individual action; no more can it purchase such action.

[The Court declines to examine the past federal appropriations for non-federal purposes catalogued in Massachusetts v. Mellon, observing that they went unchallenged only because no remedy was open for testing them. It then draws the distinction on which South Dakota v. Dole will later be built.]

We are not here concerned with a conditional appropriation of money, nor with a provision that if certain conditions are not complied with the appropriation shall no longer be available. By the Agricultural Adjustment Act the amount of the tax is appropriated to be expended only in payment under contracts whereby the parties bind themselves to regulation by the Federal Government. There is an obvious difference between a statute stating the conditions upon which moneys shall be expended and one effective only upon assumption of a contractual obligation to submit to a regulation which otherwise could not be enforced. [Congress may stipulate the sort of education for which money shall be expended; but an appropriation available only if the beneficiary contracts “to teach doctrines subversive of the Constitution is clearly bad.” The Court also rejects the suggestion that the scheme is saved because a dissenting State could declare the contracts void: if the federal power reaches the subject matter, “its exertion cannot be displaced by state action.”]

Congress has no power to enforce its commands on the farmer to the ends sought by the Agricultural Adjustment Act. It must follow that it may not indirectly accomplish those ends by taxing and spending to purchase compliance. It does not help to declare that local conditions throughout the nation have created a situation of national concern; for this is but to say that whenever there is a widespread similarity of local conditions, Congress may ignore constitutional limitations upon its own powers and usurp those reserved to the states. If, in lieu of compulsory regulation of subjects within the states’ reserved jurisdiction, which is prohibited, the Congress could invoke the taxing and spending power as a means to accomplish the same end, clause 1 of § 8 of Article I would become the instrument for total subversion of the governmental powers reserved to the individual states.

If the act before us is a proper exercise of the federal taxing power, evidently the regulation of all industry throughout the United States may be accomplished by similar exercises of the same power… . A few instances will illustrate the thought.

[Five hypotheticals follow at pp. 75–76: a tax on raw-material producers paid over to processors; payments to employers who agree to observe wage and hour standards, which Schechter Poultry Corp. v. United States, 295 U. S. 495, held Congress could not command directly; an excise on sugar paid to refiners who agree to maintain a price; payments to shoe manufacturers who cut output; and an excise on garment manufacture paid to those who agree to move their plants to smaller cities.]

These illustrations are given, not to suggest that any of the purposes mentioned are unworthy, but to demonstrate the scope of the principle for which the Government contends; … to point out that Congress would, in effect, under the pretext of exercising the taxing power, in reality accomplish prohibited ends. The supposed cases are no more improbable than would the present act have been deemed a few years ago.

Hamilton himself, the leading advocate of broad interpretation of the power to tax and to appropriate for the general welfare, never suggested that any power granted by the Constitution could be used for the destruction of local self-government in the states. Story countenances no such doctrine. It seems never to have occurred to them … that the general welfare of the United States, (which has aptly been termed “an indestructible Union, composed of indestructible States,”) might be served by obliterating the constituent members of the Union. But to this fatal conclusion the doctrine contended for would inevitably lead. And its sole premise is that, though the makers of the Constitution … intended sedulously to limit and define its powers, … they nevertheless by a single clause gave power to the Congress to tear down the barriers, to invade the states’ jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed. The argument when seen in its true character and in the light of its inevitable results must be rejected.

Since, as we have pointed out, there was no power in the Congress to impose the contested exaction, it could not lawfully ratify or confirm what an executive officer had done in that regard. Consequently the Act of 1935 does not affect the rights of the parties.

The judgment is

Affirmed.

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[Mr. Justice Stone, dissenting. Mr. Justice Brandeis and Mr. Justice Cardozo join in this opinion. Excerpts.]

MR. JUSTICE STONE, dissenting.

I think the judgment should be reversed.

The present stress of widely held and strongly expressed differences of opinion of the wisdom of the Agricultural Adjustment Act makes it important, in the interest of clear thinking and sound result, to emphasize at the outset certain propositions which should have controlling influence in determining the validity of the Act. They are:

1. The power of courts to declare a statute unconstitutional is subject to two guiding principles of decision which ought never to be absent from judicial consciousness. One is that courts are concerned only with the power to enact statutes, not with their wisdom. The other is that while unconstitutional exercise of power by the executive and legislative branches of the government is subject to judicial restraint, the only check upon our own exercise of power is our own sense of self-restraint. For the removal of unwise laws from the statute books appeal lies not to the courts but to the ballot and to the processes of democratic government.

2. The constitutional power of Congress to levy an excise tax upon the processing of agricultural products is not questioned. The present levy is held invalid, not for any want of power in Congress to lay such a tax to defray public expenditures, including those for the general welfare, but because the use to which its proceeds are put is disapproved.

3. As the present depressed state of agriculture is nation wide in its extent and effects, there is no basis for saying that the expenditure of public money in aid of farmers is not within the specifically granted power of Congress to levy taxes to “provide for the … general welfare.” The opinion of the Court does not declare otherwise.

[Stone’s fourth proposition: the amending Act of August 24, 1935, 49 Stat. 750, adopted and confirmed the Secretary’s schedule of rates, so no question of a variable tax fixed by fiat, or of unauthorized delegation, is presented.]

It is with these preliminary and hardly controverted matters in mind that we should direct our attention to the pivot on which the decision of the Court is made to turn. It is that a levy unquestionably within the taxing power of Congress may be treated as invalid because it is a step in a plan to regulate agricultural production and is thus a forbidden infringement of state power. The levy is not any the less an exercise of taxing power because it is intended to defray an expenditure for the general welfare rather than for some other support of government. Nor is the levy and collection of the tax pointed to as effecting the regulation… . The tax is unlike the penalties which were held invalid in the Child Labor Tax Case … and in United States v. Constantine, because they were themselves the instruments of regulation by virtue of their coercive effect on matters left to the control of the states. Here regulation, if any there be, is accomplished not by the tax but by the method by which its proceeds are expended, and would equally be accomplished by any like use of public funds, regardless of their source.

The method may be simply stated. Out of the available fund payments are made to such farmers as are willing to curtail their productive acreage, who in fact do so and who in advance have filed their written undertaking to do so with the Secretary of Agriculture. In saying that this method of spending public moneys is an invasion of the reserved powers of the states, the Court does not assert that the expenditure of public funds to promote the general welfare is not a substantive power specifically delegated to the national government, as Hamilton and Story pronounced it to be. It does not deny that the expenditure of funds for the benefit of farmers and in aid of a program of curtailment of production of agricultural products … is within the specifically granted power. But it is declared that state power is nevertheless infringed by the expenditure of the proceeds of the tax to compensate farmers for the curtailment of their cotton acreage. Although the farmer is placed under no legal compulsion to reduce acreage, it is said that the mere offer of compensation for so doing is a species of economic coercion which operates with the same legal force and effect as though the curtailment were made mandatory by Act of Congress. In any event it is insisted that even though not coercive the expenditure of public funds to induce the recipients to curtail production is itself an infringement of state power, since the federal government cannot invade the domain of the states by the “purchase” of performance of acts which it has no power to compel.

Of the assertion that the payments to farmers are coercive, it is enough to say that no such contention is pressed by the taxpayer, and no such consequences were to be anticipated or appear to have resulted from the administration of the Act. The suggestion of coercion finds no support in the record or in any data showing the actual operation of the Act. Threat of loss, not hope of gain, is the essence of economic coercion. Members of a long depressed industry have undoubtedly been tempted to curtail acreage by the hope of resulting better prices and by the proffered opportunity to obtain needed ready money. But there is nothing to indicate that those who accepted benefits were impelled by fear of lower prices if they did not accept.

[Stone marshals the figures: 6,343,000 acres of productive cotton land, 14% of the total, stayed out of the plan in 1934, and 2,790,000 acres, 6%, in 1935; of some 1,500,000 farms growing cotton, 33% in 1934 and 13% in 1935 did not participate. He then turns the majority’s own evidence — the Bankhead Cotton Act — against it, citing hearings and committee reports showing that restriction of cotton production could not be secured without Bankhead’s genuinely coercive provisions.]

The presumption of constitutionality of a statute is not to be overturned by an assertion of its coercive effect which rests on nothing more substantial than groundless speculation.

It is upon the contention that state power is infringed by purchased regulation of agricultural production that chief reliance is placed. It is insisted that, while the Constitution gives to Congress, in specific and unambiguous terms, the power to tax and spend, the power is subject to limitations which do not find their origin in any express provision of the Constitution.

The Constitution requires that public funds shall be spent for a defined purpose, the promotion of the general welfare. Their expenditure usually involves payment on terms which will insure use by the selected recipients within the limits of the constitutional purpose. Expenditures would fail of their purpose and thus lose their constitutional sanction if the terms of payment were not such that by their influence on the action of the recipients the permitted end would be attained. The power of Congress to spend is inseparable from persuasion to action over which Congress has no legislative control. Congress may not command that the science of agriculture be taught in state universities. But if it would aid the teaching of that science by grants to state institutions, it is appropriate, if not necessary, that the grant be on the condition, incorporated in the Morrill Act, 12 Stat. 503, 26 Stat. 417, that it be used for the intended purpose… . It makes no difference that there is a promise to do an act which the condition is calculated to induce. Condition and promise are alike valid since both are in furtherance of the national purpose for which the money is appropriated.

These effects upon individual action, which are but incidents of the authorized expenditure of government money, are pronounced to be themselves a limitation upon the granted power, and so the time-honored principle of constitutional interpretation that the granted power includes all those which are incident to it is reversed. “Let the end be legitimate,” said the great Chief Justice, “let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional.” McCulloch v. Maryland, 4 Wheat. 316, 421. This cardinal guide to constitutional exposition must now be re-phrased so far as the spending power of the federal government is concerned. Let the expenditure be to promote the general welfare, still, if it is needful in order to insure its use for the intended purpose to influence any action which Congress cannot command because within the sphere of state government, the expenditure is unconstitutional. And taxes otherwise lawfully levied are likewise unconstitutional if they are appropriated to the expenditure whose incident is condemned.

[Congress, Stone notes, has set aside intrastate railroad rates through the Interstate Commerce Commission and “made and destroyed intrastate industries by raising or lowering tariffs,” all permissibly, as incidents of the commerce power and the power to levy duties on imports.] The only conclusion to be drawn is that results become lawful when they are incidents of those powers but unlawful when incident to the similarly granted power to tax and spend.

Such a limitation is contradictory and destructive of the power to appropriate for the public welfare, and is incapable of practical application. The spending power of Congress is in addition to the legislative power and not subordinate to it. This independent grant of the power of the purse, and its very nature, involving in its exercise the duty to insure expenditure within the granted power, presuppose freedom of selection among divers ends and aims, and the capacity to impose such conditions as will render the choice effective. It is a contradiction in terms to say that there is power to spend for the national welfare, while rejecting any power to impose conditions reasonably adapted to the attainment of the end which alone would justify the expenditure.

The limitation now sanctioned must lead to absurd consequences. The government may give seeds to farmers, but may not condition the gift upon their being planted in places where they are most needed or even planted at all. The government may give money to the unemployed, but may not ask that those who get it shall give labor in return, or even use it to support their families. It may give money to sufferers from earthquake, fire, tornado, pestilence or flood, but may not impose conditions—health precautions designed to prevent the spread of disease, or induce the movement of population to safer or more sanitary areas. All that, because it is purchased regulation infringing state powers, must be left for the states, who are unable or unwilling to supply the necessary relief… . It may spend its money for the suppression of the boll weevil, but may not compensate the farmers for suspending the growth of cotton in the infected areas… . It may support rural schools, 39 Stat. 929, 45 Stat. 1151, 48 Stat. 792, but may not condition its grant by the requirement that certain standards be maintained. Do all its activities collapse because, in order to effect the permissible purpose, in myriad ways the money is paid out upon terms and conditions which influence action of the recipients within the states, which Congress cannot command? The answer would seem plain. If the expenditure is for a national public purpose, that purpose will not be thwarted because payment is on condition which will advance that purpose. The action which Congress induces by payments of money to promote the general welfare, but which it does not command or coerce, is but an incident to a specifically granted power, but a permissible means to a legitimate end. If appropriation in aid of a program of curtailment of agricultural production is constitutional, and it is not denied that it is, payment to farmers on condition that they reduce their crop acreage is constitutional. It is not any the less so because the farmer at his own option promises to fulfill the condition.

That the governmental power of the purse is a great one is not now for the first time announced… . [I]ts magnitude and … its existence in every civilized government … were well understood by the framers of the Constitution when they sanctioned the grant of the spending power to the federal government, and both were recognized by Hamilton and Story, whose views of the spending power as standing on a parity with the other powers specifically granted, have hitherto been generally accepted.

The suggestion that it must now be curtailed by judicial fiat because it may be abused by unwise use hardly rises to the dignity of argument. So may judicial power be abused. “The power to tax is the power to destroy,” but we do not, for that reason, doubt its existence, or hold that its efficacy is to be restricted by its incidental or collateral effects upon the states. The power to tax and spend is not without constitutional restraints. One restriction is that the purpose must be truly national. Another is that it may not be used to coerce action left to state control. Another is the conscience and patriotism of Congress and the Executive. “It must be remembered that legislators are the ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts.” Justice Holmes, in Missouri, Kansas & Texas Ry. Co. v. May, 194 U. S. 267, 270.

A tortured construction of the Constitution is not to be justified by recourse to extreme examples of reckless congressional spending which might occur if courts could not prevent expenditures which, even if they could be thought to effect any national purpose, would be possible only by action of a legislature lost to all sense of public responsibility. Such suppositions are addressed to the mind accustomed to believe that it is the business of courts to sit in judgment on the wisdom of legislative action. Courts are not the only agency of government that must be assumed to have capacity to govern. Congress and the courts both unhappily may falter or be mistaken in the performance of their constitutional duty. But interpretation of our great charter of government which proceeds on any assumption that the responsibility for the preservation of our institutions is the exclusive concern of any one of the three branches of government, or that it alone can save them from destruction is far more likely, in the long run, “to obliterate the constituent members” of “an indestructible union of indestructible states” than the frank recognition that language, even of a constitution, may mean what it says: that the power to tax and spend includes the power to relieve a nation-wide economic maladjustment by conditional gifts of money.

MR. JUSTICE BRANDEIS and MR. JUSTICE CARDOZO join in this opinion.

Notes & Questions

1. Big picture — the case that lost the war by winning the argument. Butler gives the Government everything it asked for on the question that mattered most and then strikes its statute down anyway. On the General Welfare Clause the Court sides with Hamilton and Story against Madison: the power to spend is a substantive power, not a mere appendage of the other enumerated grants, and Congress may therefore appropriate for objects it could not directly regulate. That holding is still the law. It is the holding Dole cites, and it is the reason the spending power became the principal instrument of federal domestic policy for the next ninety years. Everything else in the opinion — the reserved-powers limit, the conclusion that a payment to a farmer who plows under his cotton is a regulation of production in disguise — was gone within two years. Steward Machine and Helvering v. Davis, both decided in 1937 and both in this module, are the burial. So the question the module asks you to hold is not “was Butler right?” but “why did the Court, in the same Term as Carter Coal and one Term before Jones & Laughlin, choose to broaden the power and narrow the result?” One answer is that the Court thought it was giving away nothing — that the reserved-powers limit would do all the work the enumeration used to do. It did not. Notice also where Butler sits in the arc you have been tracing: it is the last major decision of the dual-federalism era to reach a spending statute, and it fails for exactly the reason Carter Coal fails, which is that the line between production and commerce, and the line between spending and regulating, are lines the Court cannot state in a form another court could apply.

2. Raw specific knowledge — separate the four holdings, and note what the reporter does not print. From this opinion alone, write out four propositions and the page each sits on. (a) Standing. The challenge comes from the receivers of the Hoosac Mills Corporation, who are being made to pay the processing tax; the Court holds they may contest it, and you should be able to say why that is not the taxpayer standing refused in Frothingham v. Mellon. (b) The tax is not a tax. The processing exaction is not a true revenue measure but an integral part of a regulatory plan, and the Court refuses to sever it. (c) The General Welfare Clause. State the Madisonian view, the Hamiltonian view, Story’s endorsement of Hamilton, and the Court’s adoption of it — and be able to quote the sentence that does it. (d) The reserved-powers limit. Agricultural production is a matter reserved to the States, and Congress may not purchase compliance with a regulation it could not command. Then note a piece of housekeeping that matters for how you read old cases: this reading carries no vote line, because the 1936 syllabus prints neither a tally nor a roster. The line-up given at the head of the reading is taken from the opinions themselves — Roberts for the Court, Stone dissenting with Brandeis and Cardozo joining at p. 88. “6–3” is an inference. Get into the habit of asking what the reporter actually printed.

3. Practical application — redraft the Act, then find the real fix. (a) You are counsel to the Department of Agriculture in February 1936. Redraft the acreage-reduction program so that it survives this opinion. You may not use the Commerce Clause; assume for the exercise that Carter Coal is good law. (b) Now compare what Congress actually did. It re-enacted the substance through the Soil Conservation and Domestic Allotment Act of 1936 and then the Agricultural Adjustment Act of 1938, which the Court upheld in Mulford v. Smith, 307 U. S. 38 (1939) — on the commerce power, at the point of marketing rather than production. So the statute was saved not by fixing the spending problem but by relabelling the activity. What does that tell you about how much of Butler was ever really about the spending power? (c) Finally, take the reading immediately after this one. Dole’s four restrictions are lineal descendants of the argument in this opinion. Draft the condition in Dole — 5% of highway funds withheld from a State that lets nineteen-year-olds buy beer — as a Butler-era Solicitor General would have had to defend it, and say which of Roberts’s objections it answers and which it does not.

4. Attack the reasoning — two incoherences, one of them Stone’s. (a) The Court announces that when an act of Congress is challenged its only duty is to lay the article of the Constitution beside the statute “and to decide whether the latter squares with the former,” and that the judicial branch neither approves nor condemns any legislative policy. It announces this in the course of enforcing a limit that appears nowhere in the constitutional text it is holding up. The Tenth Amendment reserves what is not delegated; the Court has just held, three pages earlier, that the spending power is delegated and is not confined by the other grants. Explain, if you can, how both propositions can be true at once. Stone’s answer is that they cannot, and his sentence — that the only check upon this Court’s own exercise of power is “our own sense of self-restraint” — is the most quoted line in the case for a reason. Note what makes it devastating: it is not a charge of bad faith, it is a charge that the majority’s method supplies no way to tell the difference. (b) The coercion move. The Court says the power to confer or withhold unlimited benefits “is the power to coerce or destroy,” and that the farmer’s agreement is voluntary in form only. But every conditional appropriation is voluntary in exactly this sense, and Congress had been attaching conditions to grants since 1802. State the principle that distinguishes the coercive offer from the merely attractive one. If you cannot state it in a form that does not simply track your view of the underlying program, you have found the problem that Dole postpones and NFIB is finally forced to answer.

5. Creative thinking — when does an offer become a threat? This is the question the case opens and never closes, and you will meet it three more times this semester. Two exercises. (a) The baseline. Roberts treats the farmer as coerced because refusing the payment costs him money. But he is no worse off than before the Act; the payment is a gain foregone, not a loss imposed. So the coercion claim depends entirely on what baseline you measure from — the world without the program, or the world in which everyone else has taken the money and the market price has moved. Write out both baselines for the cotton farmer of 1935 and say which one the opinion is silently using. Then do the same for the State in Dole and the State in NFIB, and see whether the Court is consistent. (b) Build the rule. Draft a two-sentence test that separates a permissible conditional appropriation from an unconstitutional one, without using the words “coerce,” “voluntary,” or “pressure.” Then test it against four cases: this one; a condition that a State raise its drinking age to twenty-one on pain of losing 5% of its highway money; a condition that a State expand Medicaid on pain of losing all of it; and a condition that a private employer adopt a federal wage scale on pain of losing its government contracts. If your test decides all four the way the Court did, check whether it decides them for the Court’s reasons or merely reaches the same results. A rule that gets the answers right for the wrong reasons is a rule that will fail on the next case.